It’s pretty common in pitches I see for the entrepreneur to give short shrift to competition or to ignore them altogether.
Unfortunately, competition is usually a big deal to the audience of potential investors. And how the entrepreneur treats the competition is an important element in sizing him or her up.
The basic rule: Be respectful of your competitors.
There are several aspects to this:
- Take their competitive threats seriously. It’s a real turn-off to hear an entrepreneur say that Competitor A is “no threat”. Every competitor is a threat. We want to understand how you think of them, what you say about them, and, most importantly, how you go against them. “No threat” = “No thought” in the investor’s mind.
- Know them as thoroughly as you can. A big confidence-builder in a presentation is an entrepreneur who can speak knowledgeably about their competitors.
- Don’t just count immediate competitors. Usually the stiffest competition is not the other startups that do just what you do, but the gorilla with a product that’s “good enough” or the newcomer with an inferior product which, however, has disruptive potential. Entrepreneurs who say they have no “real” competition (and who aren’t just talking through their hat) generally mean they have no direct clone competitor. They are not taking account of – or at least not sharing their views on – the more serious competition that can come from a gorilla or a disruptor.
- Articulate a competitive differentiation. I want to say more about this in a subsequent blog post.
Nothing in “respectful” means you should cave in the face of competition. But it does mean you go into battle with them with a plan instead of a blustering sneer. And it does mean that you share your plans with your potential investors, because it’s part of how we’re forming a judgment about your capabilities.